UK Housing Market Defies Summer Slowdown – and Now Gets a Boost from Bank of England Rate Cut

The UK property market continues to show remarkable resilience in what is traditionally a quieter period. With buyer demand, agreed sales, and the number of homes available all rising year-on-year, 2025 is shaping up to be a year of unexpected opportunity for sellers, agents, and developers alike.

And now, that momentum has been given an additional lift: the Bank of England has just cut the base interest rate to 4%, the lowest level since March 2023. This move could have significant implications for mortgage affordability, buyer confidence and, ultimately, the housing market’s trajectory through the rest of the year.

A Market in Motion: Buyer Confidence is Back

In the four weeks to 20 July 2025, agreed property sales rose by 8% year-on-year, while buyer demand climbed 11%. This robust activity stands in stark contrast to the usual summer lull and highlights a market powered by serious movers, strategic pricing and competitive financing.

What’s driving this uptick?

• A record number of homes for sale is giving buyers greater choice than ever.

• The average UK house price now stands at £268,400, up 1.3% annually—an increase of £3,350.

• Mortgage affordability testing has eased, allowing buyers to borrow up to 20% more than just three months ago—without any change to income or rates.

Bank of England Cuts Base Rate to 4%: What It Means

On 7 August 2025, the Bank of England announced a 0.25% interest rate cut, bringing the base rate down to 4%. This decision, made by a narrow majority of the Monetary Policy Committee, reflects cooling inflation and softening wage growth across the economy.

Key Impacts:

• Tracker mortgage holders will see immediate savings—an average of £29/month.

• Standard Variable Rate (SVR) borrowers could benefit by around £14/month if lenders pass on the reduction.

• New fixed-rate deals are already being repriced downward, with sub-4% offers for 2- and 5-year fixes now appearing.

This rate cut enhances affordability for first-time buyers and those upsizing—building on the demand already boosted by recent lending rule changes.

A Competitive but Balanced Market

While activity is rising, house price growth is moderating, largely due to the volume of available homes. Compared to July 2024, there are 12% more homes on the market, including:

• +19% in London

• +16% across the South East and South West

This increased choice is putting downward pressure on price growth, despite the heightened demand—creating a buyers’ market where accurate valuations and standout marketing are essential.

Regional House Price Trends

House price growth remains uneven across the UK:

• Northern Ireland: +6.1%

• Scotland, Wales, North West, North East: +2–3%

• London and the South East: +0.2%–0.8%

These figures show stronger performance in traditionally lower-priced regions—ideal for investors seeking capital and rental growth. Southern markets, by contrast, require sharper pricing and a clear focus on value to attract attention in a crowded space.

The Stamp Duty Factor

Since the end of temporary stamp duty relief in April, the cost of buying has risen:

• 83% of buyers now pay stamp duty, compared to 49% previously

• The average bill is now £2,500 per transaction

• This has disproportionately affected markets in Southern England, where property values are higher

For sellers, this highlights the importance of pricing in line with buyer expectations—overpricing can quickly deter interest in such a cost-sensitive environment.

Looking Ahead: What to Expect in Late 2025

With the market broadly balanced and supported by today’s rate cut, we anticipate:

• 5% more home sales in 2025 compared to 2024

• Sustained demand, especially from buyers who benefit from lower borrowing costs

• Price growth of around 1% for the full year—modest, but sustainable

Mortgage rates are now expected to remain in the 4–4.5% range, offering a more stable foundation for long-term planning. The rate cut also makes remortgaging less painful for those exiting fixed deals later this year.

Final Thoughts: Strategy is Everything

This is a market of opportunity—but only for those who play it right. Whether you’re selling, buying or advising, the key ingredients for success in 2025 are:

✅ Realistic pricing: Buyers are spoilt for choice—get your valuation right from day one
✅ Proactive marketing: In a crowded market, presentation and promotion are everything
✅ Regional awareness: Tailor your approach to match local trends, price sensitivity and buyer behaviour

Looking to Buy, Sell or Let?

At Kentwood Estate Agents, we help sellers and investors navigate this evolving market with confidence. Our team combines expert local insight with forward-thinking marketing to ensure your property stands out and sells quickly.